I am very excited to bring FreightWaves readers a profile of Wolfgang Lehmacher. I have never met Wolfgang, but I discovered him while I was making the transition from a generalist early-stage venture capitalist (VC) at KEC Ventures, to becoming a VC specializing in early-stage tech startups in supply chain across various industries. I often refer to my copy of his 2017 book, The Global Supply Chain: How Technology and Circular Thinking Transform Our Future. He graciously agreed to connect with me in June 2017, when I sent him a note through LinkedIn. An article providing Wolfgang’s thoughts about Brexit and how it will reshape Europe’s logistics, ran on October 11 in American Shipper, FreightWaves sister publication.

As you will see, he has an enthusiasm for
supply chain, innovation and technology. One could even say he’s obsessively
enthusiastic about supply chain, innovation and technology – which is my way of
saying, I know he’s someone I’ll instantly like when we hopefully meet in real
life one day.

Brian:
Let’s start with a bit of biographical background. Tell us a bit about
yourself. How did you come to be working in the areas of supply chain and
innovation?

Wolfgang: Sure. I was
born in Bonn, the German capital at the time. Since then, I have lived in
Paris, New York, Hong Kong and Geneva. It was a friend of mine who worked at
Schenker that inspired me with his stories about global connectivity and the
movement of goods. Hence, I joined Kuehne + Nagel and
ASG, before I studied business administration. After my studies, I joined TNT,
now a subsidiary of FedEx, where I headed among others, Switzerland and the
Eastern European and Mediterranean regions. Then, I drove the global expansion
of French La Poste for more than 10 years. Since then, I have been working as a
strategy consultant, engaged with corporations and startups, and led the supply
chain and transport industries group at the World Economic Forum (WEF).

My
mission is to promote the supply chain industry. I partner with companies to
help them grow. I have published numerous books and papers, and over 100
articles. I have spoken at more than 100 events in more than 30 countries,
including the Annual Meeting in Davos, the Boao Forum and at MIT. I am a judge
of the IATA Air Cargo Innovation Awards and member of the Logistikweisen, a
think tank under the patronage of the German Federal Ministry BMVI.

Brian:
I found you through your work for the WEF, as Head of Supply Chain and
Transport Industries from 2014-2018. Please explain what you did at the WEF.
Why does that work matter? Will that work continue now that you are no longer
at WEF?

Wolfgang: In 2014, I was responsible for finalizing the ‘Beyond
Supply Chains’ report. The report identified 31 supply chain cases and showed
that companies applying sustainable practices can increase brand value by 15 to
30%, revenue for responsible products by up to 20%, reduce carbon footprints by
up to 22% and decrease supply chain costs by 9 to 16%.

In
2015, we delivered ‘Enabling Trade: Unlocking the Potential of Mexico and
Vietnam.’ Working closely with the governments on jointly agreed sectors, we
developed proposals to improve policies and increase competitiveness. One of
the selected sectors was the medical devices industry. The study showed that by
removing specific non-tariff barriers throughout the value chain, Mexico could
generate up to $1.5 billion in economic growth per year. In the same year, we
worked with the electronics industry community on the impact of the digital
era. The study predicted that analytics services will become the new standard
in logistics with the potential to save up to 10% of distribution costs and up
to 30% of vehicle maintenance costs.

In
2016, we worked on outlining the digital dimension of the Belt and Road
Initiative. The study showed that making the new Silk Road ‘smart’ can boost a
region’s GDP by 4 to 7%. We also facilitated an open communication to reboot
trade for the Annual Meeting in Davos in 2018, signed by 10 supply chain CEOs,
including Søren Skou, chief executive officer of A.P. Moller Maersk, and David
Abney, chairman and chief executive officer of UPS. Today’s trade situation
shows the importance of such initiatives.

The
work continues in the various teams.

Personally,
I support the Forum as a member of the Expert Network. This year, I facilitated
a concept note on new innovative models in production and contributed to
several blockchain papers.

Brian:
That’s amazing. It dovetails with the studying I have done, which led me to
conclude that innovation in supply chain is a source of sustainable competitive
advantage for companies, and an economic multiplier for countries and economic
regions of the world. Here’s a related question – what three or four technologies
do you see that will most transform supply chains and transportation over the
next decade or two? Why?

Wolfgang Lehmacher (Photo credit: Lorenzrichard.com)

Wolfgang: Key technologies in supply chain are robotics, robotic
process automation, the internet of things and artificial intelligence. The
technologies are all at different stages of maturity and come in bundles.
According to a Gartner report, at least 50% of large global companies will be
using artificial intelligence, advanced analytics and internet of things in
supply chain operations by 2023.

The
automotive industry has been using robots in manufacturing for decades. In
2012, Amazon was the first to introduce robots in its warehouses and others
have been following its lead. Last year, Mujin, a Tokyo-based startup, equipped
a warehouse operated by Chinese e-commerce giant JD.com with 20 industrial
robots that pick, transfer and pack packages using cameras, crates on conveyor
belts, as well as Mujin robot controllers. Other robots cart merchandise around
to loading docks and trucks. JD.com calls this 40,000-square meter facility in
Shanghai the world’s first fully automated warehouse.

Recently,
robotic process automation has moved into the spotlight. It’s artificial
intelligence that works with computer software to perform repetitive, detailed
administrative tasks ranging from data cleansing to preparation of documents to
digital interactions with customers. According to another Gartner report, 73% of
corporate controllers will be using some form of robotic automation by 2020.

In
search of end-to-end supply chain visibility, Maersk has equipped 300,000
reefer containers with internet of things devices and shipping line CMA CGM
announced that it is ordering 50,000 devices to increase its offer of connected
containers.

The
company that knows in advance what will be bought, when and where can
streamline its supply chain. Artificial intelligence is the key to achieve this
goal. Otto, a German e-commerce merchant, has created a system that analyses
around three billion transactions and 200 variables, including sales data,
website searches and weather information. With 90% accuracy, it can predict
sales behavior in the next 30 days. Now, the company says it can purchase
around 200,000 items a month without human intervention.

Brian:
Wow. We were fortunate to have JD Logistics participate in an Urban
Distribution event sponsored by DHL, and organized and hosted by The New York Supply
Chain Meetup in May. On
another related note, at my prior fund, I sourced our investment in Ayehu Software
Technologies in 2013
precisely because I believed that robotic process automation would become more
critical for enterprises seeking ways to more effectively cope with various IT
challenges. It’s heartwarming for me, personally, to see the increased focus
and excitement around what seemed like an arcane and rather boring business at
that time.

You
recently joined a think-tank that is part of Reefknot
Investments. Tell us a
bit about Reefknot Investments, and the role that the think-tank will play. Why
did Temasek and Kuehne + Nagel decide to team up to
launch a venture fund?

The
Reefknot think tank, called the Centre of Excellence for Global Emerging Supply
Chain Technologies, aims to drive new business models and transformations in
the supply chain and logistics industry. Some key themes we will focus on are
disruptions that result from changing consumer behavior and the challenges
resulting from climate change.

Besides contributing expert opinions through forums, panels and thought leadership papers, the think tank will work with start-ups, established companies and scholars to promote the sharing of knowledge.

Brian:
That is very exciting. So, it sounds to me that the Centre of Excellence for
Global Emerging Supply Chain Technologies will serve as a bridge between people
building tech innovations for supply chain and people who want to buy tech
innovations for implementation in real-world commercial supply chains. That’s
precisely why we started the The New York Supply Chain Meetup, and it’s the
motivation behind our effort to grow into a global network of grassroots-driven
communities focused on supply chain, innovation and technology. I love that.

Based
on your experience, what advice would you offer startup founders who are in the
very early stages of attempting to develop new innovations to solve problems in
supply chain and to bring those innovations to market?

Wolfgang: It is critical is to focus on innovations that address
real-world challenges, such as the lack of end-to-end visibility and the carbon
footprint. Also, the seamless delivery of online orders is still not the
standard. Everything that helps the industry to better understand the value of
data is helpful too.

Solutions
need to be scalable. Supply chains are global and require interoperability with
many different systems and practices and need to comply with a broad range of
laws and regulations.

By
nature, supply chains can’t be fully digital, and the physical layer needs to
be considered.

Startups
need to be lean. But certain functions are critical. A founder and chief
executive officer that is tied-up with raising capital doesn’t use time wisely.
A professional fundraiser or an advisor that supports this activity is
critical.

Brian:
I couldn’t agree more. You’re basically paraphrasing our rationale for building
a specialist supply chain technology fund. Which brings me to my next question.
My partner and I are in the early stages of building a venture fund, REFASHIOND
Ventures, to invest in
technology startups that are developing innovations to refashion industrial
supply chains. What advice would you offer people like us?

Wolfgang: Start with a thesis of the market. What are the key
developments and how will they impact the supply chain? Then, select target
areas based on potential and find use cases that eliminate specific pain points
to map out the space. Scoring models will help you to narrow the search and a
proper due diligence will guide you to the most promising players in the
respective fields. Involve industry experts to confirm your assumptions and
findings. They can also help to grow and scale the portfolio companies.

Brian:
I am chuckling because I know my partner and co-founder, Lisa, is silently
pumping her fists. We’ve debated the use of scoring models in the past.
Initially, I wasn’t totally invested in the idea, but I have since persuaded
myself that we should use some internal scoring model to help us develop
time-series analyses as we build the fund. Now we just need to raise our first
fund and create a model that works. (This is my attempt at cracking a joke.)

Wolfgang,
this has been an amazing conversation. I say that with all sincerity. What
should readers of FreightWaves expect to see from you in the future?

Wolfgang: The continuation of the past. I enjoy what I am doing,
and the feedback received confirms the relevance of my work. But who knows?
Life is full of opportunities and I am open to expand or move beyond my scope.

Brian: Thank you for spending this time with us. I look forward to being able to share your work with FreightWaves readers in the future.

Brian Laung Aoaeh writes about the reinvention of global supply chains, from the perspective of an early-stage technology venture capitalist. He is the co-founder of REFASHIOND Ventures, an early stage venture capital fund that is being built to invest in startups creating innovations to refashion global supply chain networks. He is also the co-founder of The Worldwide Supply Chain Federation (The New York Supply Chain Meetup).
His background covers the gamut from scientific research, data and statistical analysis, corporate development and investing for a single-family office, and then building an early stage venture fund from scratch - immediately prior to REFASHIOND. Brian holds an MBA in General Management, with a specialization in Financial Instruments and Markets, from NYU’s Stern School of Business. He also holds a Bachelor’s Degree in Mathematics & Physics from Connecticut College. Brian is a charter holding member of the CFA Institute. He is also an adjunct professor of operations management in the Department of Technology Management and Innovation at the New York University School of Engineering.